So, if Citigroup Inc. is so strapped for cash that it has to pull its lending commitment for the takeover of BCE Inc., as so many investors appear to believe is inevitable, what is the admittedly wounded financial colossus doing as part of the syndicate planning to lend an unimaginable $55-billion (U.S.) to BHP Billiton to fund the takeover of Rio Tinto Group?
Goldman Sachs, Citi and five other banks have committed to providing the financing, the largest lending agreement in history in part to fund a share buyback of $30-billion if the all-stock deal closes.
Sure, there are some differences, the main being that LBO loans are not exactly hot sellers right now when banks try to syndicate, while debt from a strategic mining merger might be an easier sell. But even so, the loan proves what banks have been saying all along when asked about BCE: They are in the business of lending.
Still, there had been talk of a $70-billion loan package, so the current skitttishness in credit markets is definitely having an effect.
